Grape Wars 2009 Case Study

Columbia Gorge: Washington on the left, Oregon on the right.

Washington State produces much more wine than Oregon, but Oregon wines are sometimes easier to find outside the Pacific Northwest. That was a paradox that I discovered as I traveled around the country last year on the Wine Wars book tour and giving alumni talks for the University of Puget Sound.

The Signature Wine Advantage

One explanation for this surprising situation is that Oregon has a “signature wine” while Washington does not. When people think of Oregon they think Pinot Noir and so retailers know what to stock — Pinot Noir at various price points. But what comes to mind when you think of Washington? Nothing, the argument goes, because Washington is many things — Cabernet, Merlot, Riesling, Chardonnay, Syrah, various blends, etc. etc. — and not any one particular thing. Lacking a signature wine variety, retailers don’t know what to stock on their shelves, so they stock less, concerned that it might not sell.

This argument is over-simplified for sure and probably over-sold, too, but the signature variety issue does seems to give Oregon a bit of an advantage over Washington and has caused much hand-wringing on the north side of the Columbia River over the years.

Lucky Oregon — they’re Pinot Noir. Everyone knows who they are. Poor Washington — we’re [almost] everything, but how do we communicate that? I want to look at both sides of this dilemma over the next few weeks and see if I can shed any light on the question of how wine regions define themselves and the challenges and opportunities of the different strategies.

The Other Oregons

So let’s talk about Oregon. It is rightly known for its fine Pinot Noir wines and it highlights this fact each year at the International Pinot Noir Celebration in McMinnville. The IPNC gathers Pinot-makers and Pinot-lovers from all around the world, drawing attention to the Oregon industry. It’s an intense experience — so intense that I use it as the focal point for the chapter on “Extreme Wine People” in my forthcoming book Extreme Wine.

But Oregon is not really a one note samba — it is more than Pinot Noir and more than the Willamette Valley, too. And that’s a bit of a problem, because while signature varieties like Oregon Pinot open doors to a wider market, they can also erect barriers to public recognition of other wines and regions. The wine world is very complicated and I wonder if consumers and retailers who think they finally understand Oregon (or Washington or Chile, etc. etc.) are interested in having that understanding challenged, even if the result would benefit them?

I’m exploring how this question plays out in the “other Oregons” in two stages. We’ve just returned from a weekend of research in the Columbia Gorge AVA, to see one example of Oregon beyond Pinot Noir, and we plan to visit Southern Oregon later in the year for a different take on the situation.

Absolutely Gorgeous

The Columbia Gorge AVA, established in 2004, is a beautiful region with many excellent wines, but it is sort of trapped between two worlds. It starts near the town of Hood River, about an hour east of Portland on Interstate 84, and extends past The Dalles. The AVA runs along both sides of the Columbia River, embracing vineyards and wineries on both the Washington and Oregon shores. Is it a Washington AVA or an Oregon AVA? Both, I think, but that’s part of the “two worlds” confusion.

A typically complicated Columbia Gorge terroir.

The western end of the AVA is very much classic Oregon on both sides of the river. Like the Willamette Valley, the climate is rainy (36 inches a year on average, but as much as 50 inches at the famous Celilo Vineyard) and cooler climate grapes like Pinot Noir, Chardonnay, Riesling and Gewurztraminer do well here. The Chardonnays and Pinots we tasted at Phelps Creek Vineyards were distinctly and intentionally Burgundian in style, for example, and Rich Cushman’s Rieslings at Viento Wines are works of the Riesling-maker’s art. Nice wines!

Oregon to the West, Washington to the East

So the Gorge is Oregon on the west end (and on both sides of the river), but as you drive east things begin to change. By the time you reach The Dalles you’ve experienced a rain shadow effect and the average rainfall is just 10 inches! Cabernet and Merlot (Washington wine grape varieties) do really well here as do Syrah and even Zinfandel. (Watch for a future post about the 120 year-old Zinfandel vines we found!).

Washington or Oregon? It’s not so much which side of the river as which end of the AVA. But it gets even more confusing (for anyone seeking a simple identity for the wine region), because elevation and aspect are key factors, too. Winegrower Lonnie Wright (the curator of those old Zin vines), drove us to a hilltop where rows of Zinfandel vines cascaded down the south-facing slope while Pinot Noir vines streamed down the north-facing side, the Zin benefiting from the advantageous aspect while the Pinot prospered because of the elevation.

It’s Complicated

The Gorge is divided in other ways, too. While you and I might think of it in terms of wine, other crops are probably bigger business for the local landowners. You can’t imagine the acres of apples, pears and cherries we drove through on our way to the hillside vineyards. And tourism just might be a bigger industry in the long run. Fortunately these three sides of the Gorge economy mainly reinforce each other in a happy way except of course when they don’t (water rights in drier areas, for example).

Washington or Oregon? Well, as I said, both, but not a region that clearly fits into the stereotype of either state’s wine industry. Some of the wine people I met were happy to have the Oregon association since that is so clearly defined (and works quite well for the quantities of Pinot Noir grapes grown here, which often end up in Oregon appellation wines from Willamette Valley makers). But obviously it cannot encompass the great variety of terroirs, climates and grape varieties found in the Gorge.

Wine is just too darn complicated to be reduced to a single thing. Even in Oregon. Or Washington. Or wherever the Columbia Gorge is!

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The paradox of the Columbia Gorge AVA is just one aspect of the increasing interwoven nature of the the Washington and Oregon wine industries (and the fact that the Columbia River actually unites these regions more than it divides them). The Walla Walla AVA also crosses the state line, of course, and many “Oregon” wineries have grapes trucked down along the river from Washington AVAs such as Horse Heaven Hills to wineries in the Gorge and the Willamette valley, where they make “Washington wines” in “Oregon” wineries — a good thing for everyone involved in my book even if it adds to the wine region identity crisis just a bit.

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Thanks to Lonnie Wright (The Pines 1852) and Rich Cushman (Viento Wines) for showing us their sides of the Gorge — look for more about their projects in future posts. Thanks to Bob and Becky Morus for making our visit to Phelps Creek possible. Thanks to research assistants Bonnie Main and Richard Pichler for their expertise and enthusiasm. Thanks to contributing editor Sue Veseth for research assistance and the photos shown here.

Global Wine Wars 2009: Old versus New World

The wine industry experienced significance growth in the Christian era because competition for luxury and dynastical stature. Earlier, Europeans had plantations of vines to manufacture various grades of wine. With the establishment of a wine processing firm in France, production of wine grew tremendously. Because of favorable conditions in the country, France became a major producer of wine all over the world. France dominated the industry for centuries before other countries could match her production capacity. Notably, the thriving wine industry in France became the epicenter of economic, social and political issues in the country. One of the leading factors, which led to France’s successful wine production, was its proper climatic conditions and geographical features. Located at the heart of Europe, the country experienced as reliable rains and good weather conditions for the growth of grapes. Moreover, France had the right soils, which had matching nutrient requirements of grapes (Bartlett, 2009, p. 78). With naturally fertile soils, France got bumper harvest of grapes, which provided sufficient raw materials for wine production. This was its strength over potential competitors regionally and worldwide. Due to these conditions, France got experience in wine production, and supplied the finest wine brands in Europe and all over the world.

Its excellent and promising quality of produced wine further propelled France to dominate the industry. It heavily invested in quality wine production as compared to its competitors, making it an experienced player in the market. Additionally pioneers of wine production and promoters embraced the country’s passion for high quality wine. Thus, the industry not only gained dominance but also global recognition. Adoption of technology in wine production further contributed to France’s dominance in the industry. During this time, plants adopted new technology in mass production of bottles, manufacture of crock stoppers and pasteurization of crude wine. With new technology, it was possible to store processed wine for a longer time and meet the demand for wine in different markets. France also supplied wine to distant markets, creating a lucrative global market of which it was the main player. With innovation and relevant technology at hand, wine became stable as it could stay longer without going bad (Bartlett, 2009, p. 82).

France further thrived in wine production because of the government’s goodwill and support. The government of the day formulated and implemented policies, which ensured disciplined practices and high quality production. The government was in full control, making it easy to monitor wine production directly. Some of the measures, which the government implemented, were VDQS and AOS, which regulated wine production from setting up the vineyard to processing. In terms of wine processing, France rose to dominate the market because it had more competitive advantages than its competitors did. Some of these advantages included government support, new production technology, and suitable climatic conditions. By dominating the global market, French wine industry grew not only in Europe but also in the world.

It is worth noting that France faced a range of threats even though it had numerous competitive advantages in the market, as it was exposed to vulnerable conditions. For instance, there was disharmony between vineyards and production, which led to the disintegration of the entire process. Furthermore, unprecedented poor weather conditions, diseases and the high cost of the vineyard dented sales and French distribution system. High taxes and poor roads for transport further catalyzed the vulnerability of the sector. Consequently, the wine industry in France began experiencing logistical and operational challenges in the production process.

Because of the escalating challenges, France and other traditional wine producers started losing their dominance in the industry worldwide. For example, French system of production changed, resulting into high cost of vineyards in the country. Moreover, the continuous production of wine led to the depletion of vineyards. While this was the case, new world had begun using new land, which was more affordable than traditional French vineyards. The entry of New World Countries in the wine industry affected the performance of France and other traditional wine producers. These new countries gained momentum in the industry, with their lower prices, stemming from low operational costs. Which cheap land in these countries, it was also easier to acquire vineyards (Bartlett, 2009, p. 84). Appoint to note, most New World Countries adopted grape farming and applied new technology in processing. Growing grapes remained an extensive exercise because of irrigation techniques. With the introduction of mechanical harvesters, farmers adopted mechanized harvesting. There was high production because of the introduction of fertilizers and adoption of pruning methods. New World Countries also adopted on-site lab technology, which was key in carrying out analysis on proper grape farming and harvesting practices. As a result, they experienced low cost of production, causing a shift in the global wine market. With these developments, France and its affiliates lost their traditional global market share to the New World Countries, which capitalized on their already existing advantages to dominate the world market. This had negative impact on economies of former wine-producing giants.

The most appropriate advice for the head of French Wine Industry concerns regulatory measures and policy framework in processing and manufacturing. For example, AOC regulations are hurting the industry by offering non-competitive opportunities with the emergence of New World Countries, even though they allow production of finest wine in the global market. Thus, the head of French Wine Association must work towards lessening the application of AOC rules together with meticulous research and use of technology in wine production. The head of French Wine Association should further discourage total control of the industry by the government. Some of the government policies ought to be annulled because they undermine wine production process (Bartlett, 2009, p. 87).

In addition, the proprietor of Bordeaux Vineyard, which is a renowned producer of premium and super premium wines, must implement operational measures in order to take advantage of the situation. A good example is developing technology in production to allow new brands thus retaining customers. Bordeaux Vineyard must put into practice responsive attributes regarding new technology and production of new brands. They must however put weight on lucrative markets, which have more opportunities for better returns.

Notably, The Australian Wine industry is successful in implementing its operational measures. With its mission and vision, it is ahead of other competitors in the market. For instance, it has an achievable mission of being the world’s best producer of wine brands by 2015 through innovation and pricing. Nonetheless, it continues to struggle with issues of promotion, price and image design. To handle this, the association should invest in global marketing campaigns to enhance their public image and awareness of the Australian wine quality (Bartlett, 2009, p. 89). If it implements these measures, the association will overcome current threats and thrive in wine production and marketing.

On the other hand, Vineyard in Barossa should carry out intensive research on high quality wine production at a lower cost. They also consider other markets like Asia and China and not relying on US and British markets.

For the US wine industry, the head should focus on streamlining the production cost through mechanization like the Australian wine industry does. Moreover, the US should do away with its three-tier distribution system, as it is a threat to export products, while handing over cost advantage to other players. USA wine producers should also include middle segment in the whole production process. American wine agencies must develop brands and promotional strategies to reach the global markets.